John Sandberg and Christina Terraccino (shown in Facebook photo) made plans to create the Hurricane Sandy Relief Foundation days before the storm reached New Jersey.

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@MullenAPP

KEEPING TABSON CHARITIES

To check if a charity is registered with the New Jersey Division of Consumer Affairs, visit the Division's online directory of registered charities on its website, www.njconsumeraffairs.gov, or call the division's charities hotline at 973-504-6215 during regular business hours. The division also offers a free “New Jersey Charity Search” smartphone app. Note: Certain religious and educational organizations, and charities whose annual income includes less than $10,000 in public contributions and fundraising, are exempt from having to register with the state. To check a charity’s federal tax-exempt status, search the Internal Revenue Service’s online database at www.irs.gov or call 877-829-5500. View screen grabs from the Hurricane Sandy Relief Foundation’s website. A8

FROM THE HSRF WEBSITE

Image 1:The Hurricane Sandy Relief Fund home page. Image 2: A drop-down menu on the site shows a supposed link to the governor’s wife’s charity, Hurricane Sandy New Jersey Relief Fund, which is not associated with the similar sounding HSRF. However, when you click on that link, it won’t take you to Mrs. Christie’s charity. It will keep you on the HSRF site and the donation will be sent to HSRF, not Mrs. Christie’s charity. Image 3: A claim that HSRF has an IRS approved nonprofit tax status. HSRF is not tax exempt and does not have a 501(c)3 designation. The website also shows supposed sponsors of HSRF. Officials at CSX and Hanes said their companies are not sponsors. The other companies did not return calls for comment. Image 4: The mailing address for donations is the same as the home address for one of the operators of HSRF.

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A Sandy relief group that has raised $1 million in cash is not a tax-exempt organization, as it claims, nor is it registered in New Jersey to operate as a charity, an Asbury Park Press investigation found.

In addition, the Hurricane Sandy Relief Foundation, run by a Sparta couple, solicits funds on its website using the name of a legally registered charity headed by New Jersey first lady Mary Pat Christie, the Hurricane Sandy New Jersey Relief Fund. State law prohibits such practices, according to the state Division of Consumer Affairs, which regulates charities.

Also, HSRF’s co-founder, John Sandberg, claims to have a degree from Seton Hall University, yet the school’s registrar’s office says he didn’t graduate. Two of the corporate “sponsors” cited on the HSRF website, www.sandyrelief.org, say they aren’t sponsoring the foundation. To maximize the website’s visibility, Sandberg says he registered 120 different Internet domain names related to Sandy relief. Last week, his site ranked No. 1 in a Google search for “Sandy relief fund,” ahead of the American Red Cross, the Robin Hood Foundation, and Mrs. Christie’s charity.

Meanwhile, the foundation has yet to distribute more than $800,000 in cash donations, according to Sandberg.

That aggravates storm victims such as Carol Schelest, who filled out the group’s detailed online application for aid weeks ago and has yet to receive a response.

“I’m really starting to wonder about this charity,” said Schelest, 45, whose home in the Bayville section of Berkeley still isn’t habitable on the first floor. “What do they plan to do with the rest of the money?”

Thinking ahead

Sandberg, a 30-year-old real estate salesman, says he began laying the groundwork for the foundation with his accountant girlfriend, Christina Terraccino, 27, and a few friends days before the storm reached New Jersey. He says the group is experiencing some growing pains but is operating above board.

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“At this point right now, nobody’s on salary; nobody’s taking a dime,” he said. “We’ve done nothing but help people.”

But when the Press asked to see the group’s bank statements, Sandberg at first agreed, then canceled the appointment.

The foundation already has distributed roughly a half-million dollars in donated supplies and nearly $150,000 worth of gift cards to community groups and storm victims throughout New Jersey and New York, Sandberg said.

“Nobody's been out there since Day One like we were — nobody,” said Sandberg, who shares a home with Terraccino in Sparta.

“We were out there before the Red Cross,” he said. “I was delivering pallets of vitamin water all across South Jersey since Week One, before anybody had anything.”

The bulk of HSRF’s cash donations poured in during the last three weeks of December, Sandberg noted.

Since then, he said, the foundation has been trying to retool the way it distributes aid, and is still in the process of preparing the necessary paperwork to register as a New Jersey charity and apply for tax-exempt status from the Internal Revenue Service.

One of those who received aid was Michael C. Armstrong of the Leonardo section of Middletown. Armstrong, 29, said he sought aid from several relief groups on behalf of family members who were displaced from their homes in Highlands, and the Hurricane Sandy Relief Foundation was the only one that delivered. A few weeks after he contacted the foundation, the group provided two Lowes gift cards totaling $500, he said.

"They were gracious enough to stop in the Highlands,and they checked everything out and they gave us gift cards,” Armstrong said.

Not tax-exempt

Sandberg said the foundation has a backlog of several hundred aid applicants. He estimated that everyone on the waiting list who qualifies for aid would receive gift cards within 30 days.

Up until now, Terraccino, who volunteers full-time to serve as the foundation’s executive director, is processing all aid requests, with help from just a handful of volunteers, Sandberg said. The group’s board of directors, which is still being formed, meets periodically to authorize aid grants, he said. The group is exploring the possibility of bringing on paid staff, he added.

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“I wouldn't say we're in over our heads, but I think we definitely put the brakes on at the right time to re-valuate, you know, before making a mistake,” Sandberg said.

A closer look at the foundation’s operations, however, shows mistakes may have already been made.

For example, the group’s website states that the foundation is a tax-exempt 501(c)3 nonprofit, yet in an interview Terraccino acknowledged that the group doesn’t yet have that status.

Melanie Swift, a nonprofit expert who is helping the foundation prepare its IRS application, said she urged the group’s operators weeks ago to remove the tax-exempt claim from their website, but the statement was still there last week.

“Whenever we see that we say, ‘Take that down,’ ” said Swift, director of nonprofit services at CharityNet USA, a company in Orlando, Fla., that helps charities get off the ground. “It's misleading to the public, and it will open up a huge can of worms with the IRS if they see it.”

Swift said the foundation also still needs to be registered as a New Jersey charity.

“Technically they are not allowed to fund raise in New Jersey, or in any other state, without being licensed in those states,” Swift said.

In New Jersey, groups that raise more than $10,000 without being registered can face a civil penalty of up to $10,000 for an initial violation, and up to $20,000 for any subsequent violations, according to Jeff Lamm, a spokesman for the state Division of Consumer Affairs. Lamm confirmed that the Hurricane Sandy Relief Foundation is not on the division’s list of registered charities.

Misleading donors?

The group is also using the name of Mrs. Christie’s charity on its website.

The site has a donation page titled “Hurricane Sandy New Jersey Relief Fund,” the same name Mrs. Christie’s charity uses. Yet donations made through that page go to Sandberg’s foundation, not to Mrs. Christie’s charity.

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One nonprofit expert, Charles McLean, vice president of research and data quality at Guidestar USA Inc., an online nonprofit data provider with offices in Williamsburg, Va., and Washington, says using that name might mislead prospective donors into thinking they are dealing with Mrs. Christie’s charity.

Through a spokeswoman, Mrs. Christie’s charity declined comment, other to say it is not affiliated with Sandberg’s foundation.

Sandberg insists there’s nothing wrong with using “Hurricane Sandy New Jersey Relief Fund” on his site because it is one of the domain names he registered when he was setting up the foundation.

“If you really want to get into it, technically she copied me,” Sandberg said, referring to Mrs. Christie.

But Swift of CharityNet USA says that owning a domain name doesn’t entitle a nonprofit to use the name of a legally incorporated and licensed charity to raise funds. Mrs. Christie’s charity is incorporated and registered with the state under that name, records show.

Asked for a clarification, Eric T. Kanefsky, acting director of the state Division of Consumer Affairs, issued the following statement:

“New Jersey’s charities statute and regulations specify that it is unlawful for an organization to confuse or mislead consumers into making a donation through the use of a name similar to that of a registered charitable organization,” the statement said.

Sponsorship questions

The HSRF’s website identifies a number of well-known corporations as “sponsors” of the foundation, including Hanes underwear and CSX Corp., an international transporter of goods.

A spokesman for CSX confirmed that one of its executives arranged to have containers of donated supplies from South Carolina transported by rail to New Jersey on the foundation’s behalf. But the spokesman added that the transportation company isn’t a corporate sponsor of the foundation and has asked the group to remove the CSX logo from the site. The logo continued to appear on the site last week.

A spokesman for Hanes said he could find no record of any donation made to the foundation by either the apparel company or its charitable arm.

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Sandberg explained that the father of “one of my sister’s very good friends” owns a Hanes warehouse and donated $10,000 worth of Hanes T-shirts to the foundation. Sandberg said he could not recall the donor’s name.

“The guy’s loaded; I don’t know,” he said. “It’s a Russian last name.”

Graduate or not?

Sandberg claims on his LinkedIn job profile site to have a bachelor’s degree from Seton Hall University. A Seton Hall spokeswoman, however, said that the registrar’s records indicate that Sandberg attended the school but never graduated.

“Well, that’s ridiculous. I’ve donated money to Seton Hall,” Sand-berg responded. “I've had problems in the past with them as far as payments, (not) paying for my last semester in school, but that was resolved four years ago.”

Court records show Sandberg has had several debt judgments levied against him in recent years, including two state tax liens since 2008 totaling $25,000 that have since been paid. Sandberg blamed his parents for his debt problems.

“I haven't been able to clear my credit since I was 18 years old,” he said. “So I've had this issue my entire life, which is a reason why I've always needed to make cash and make a lot of money.”

“I've been fortunate to be able to do things in my life without credit,” he said. Sandberg’s parents could not be reached for comment.

A 'gray area'

Terraccino said she met with officials from the state Attorney General’s Office, which encompasses the Division of Consumer Affairs, in early January to discuss the foundation’s operations. Lamm, the DCA spokesman, confirmed that a meeting took place, but would not provide any details about what was discussed.

Yet weeks after the meeting, Terraccino, who has experience auditing nonprofit organizations, appeared uncertain about what steps the foundation still needed to take.

“How exactly do you register as a charity?” she said when asked why the foundation hadn’t filed the required paperwork with the state.

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“There's not really a concrete way or list of things to do in order to start a charity,” she said. “There are many different departments and states you have to register with, and there just happens to be some gray area with some requests that they have. We are doing our best to keep up with all the rules and regulations.”

A spokeswoman for the New York Attorney General’s Office said the foundation wasn’t registered to raise funds in that state, either.

Terraccino wasn’t sure whether donors who contributed to the foundation prior to the end of last year would be able to claim a tax deduction when they file their 2012 tax returns.

“Yes. I mean, I hope so,” she said. “I’m not the IRS.”

Swift, of CharityNet USA, said all she needs to complete the foundation’s New Jersey charity registration and IRS applications are reconciled bank statements for 2012.

“I need detailed financial data — exactly what they brought in, by line item, and exactly how they spent it, by line item,” she said.

Sandberg agreed to provide the Press with the foundation’s bank statements, but never produced them.

Swift said it normally can take up to a year for the IRS to process a tax-exempt application, but the agency is expediting requests filed by Sandy relief groups. She expects a turnaround time of 30 days or less, once the application is filed.

The good news for donors, she said, is that once tax-exempt status is approved, it’s retroactive to the date the nonprofit was formed. Sandberg filed paperwork to incorporate the foundation as a New Jersey nonprofit corporation on Oct. 30, the day after the storm, records show. Not all nonprofits are charitable institutions, Swift noted. A different process is required to register as a New Jersey charity.

Swift stressed that there is often a steep learning curve for groups trying to set up as charities.

“It looks like they just don't have their ducks in a row,” she said of the foundation. “Nine times out of 10, there’s no ill intention.”

Yet Swift said the Press’s findings raise legitimate questions about how the foundation runs.

“Those are things that would be questionable for me,” she said. In particular, she was surprised that Sandberg started setting up the foundation before the storm struck and registered so many domain names. Sandberg explained that he anticipated that relief groups and government agencies would be overwhelmed if the destruction turned out to be as dire as forecasters feared.

“To do that much in advance, it seems like ... if you're going to go to all that trouble (to start a charity to help storm victims), you would at least go to the trouble of figuring out what you need to do to do it right,” Swift said.